Question

The following data were taken from Alvarado Company's balance sheet: Dec. 31, 2019 Dec. 31, 2018 Total liabilities $4,085,000 $2,880,000 Total owner's equity 4,300,000 3,600,000 a. Compute the ratio of liabilities to owner's equity. Round your answers to two decimals.

Answer 1

Answer:

Dec. 31, 2019 Ratio to Liabilities to Owner's Equity = 0.95

Dec. 31, 2018 Ratio to Liabilities to Owner's Equity = 0.80

Explanation:

given data

Dec. 31, 2019

total liabilities = $4,085,000

Total owner's equity = 4,300,000

Dec. 31, 2018

total liabilities = $2,880,000

Total owner's equity =  3,600,000

to find out

Compute the ratio of liabilities to owner's equity

solution

we know that here Ratio to Liabilities to Owner's Equity is Total Liabilities divide Total Owner's Equity      ....................1

so

now put here value for both 2018 and 2019 from equation 1

so for Dec. 31, 2019

Ratio to Liabilities to Owner's Equity = $\frac{4085000}{4300000}$

Ratio to Liabilities to Owner's Equity = 0.95

and for Dec. 31, 2018

Ratio to Liabilities to Owner's Equity = $\frac{2880000}{3600000}$

Ratio to Liabilities to Owner's Equity = 0.80